Lockwood Grader Corp. v. Bockhaus, 17152

• Decision Date: 26 April 1954
• Docket Number: No. 17152,17152
• Citation: 270 P.2d 193,129 Colo. 339
• Parties: LOCKWOOD GRADER CORP. et al. v. BOCKHAUS.
• Court: Colorado Supreme Court

Page 193

270 P.2d 193

129 Colo. 339

LOCKWOOD GRADER CORP. et al. v. BOCKHAUS.

No. 17152.

Supreme Court of Colorado, En Banc.

April 26, 1954.

Gordon H. Rowe, Jr., Monte Vista, William H. Heiss, Gering, for plaintiffs in error.

Moses & DeSouchet, Alamosa, for defendant in error.

KNAUSS, Justice.

December 31, 1951 Lockwood Grader Corporation filed its complaint against Ralph L. Bockhaus and the Public Trustee of Rio Grande county, Colorado for foreclosure of a trust deed on real estate executed by Bockhaus, defendant in error, to secure his promissory note dated August 18, 1950, in favor of Lockwood Grader Corporation, on which an alleged balance of some $9,600 and interest was past due. Plaintiff in said action also asked for the appointment of a receiver of the real estate described in the trust deed, and the application of the proceeds of the rental thereof during foreclosure on the indebtedness plaintiff claimed was due it from Bockhaus.

The Public Trustee filed a disclaimer.

January 15, 1952 plaintiff filed its motion for the appointment of a receiver. In February, 1952 a receiver was appointed and he notified Bockhaus that possession of the premises involved would be demanded on March 5, 1952. Bockhaus offered to pay $200 per month as rental for the property, and the equipment therein contained, and certain lesser amounts in the event the fixtures and machinery on said premises, also covered by the trust deed, were sold. Plaintiff offered to pay the receiver $260 per month as rental for the real estate and equipment until the plaintiff's sale of the chattels, and $125 per month thereafter during the pendency of the receivership. These offers were submitted to the court and, after hearing, the court directed the receiver to rent the premises to plaintiff on the terms by it proposed. Lockwood Grader Corporation was organized under the laws of the State of Nebraska, and had done business in Colorado for many years prior to the date of the trust deed which it sought to foreclose. Lockwood Graders of Colorado filed its articles of incorporation as a Colorado corporation on February 28, 1952. Lyle F. Enyeart, T. J. Lockwood and his wife Margaret Lockwood were the incorporators.

April 26, 1952 Lockwood Graders of Colorado, a Colorado Corporation, T. J. Lockwood and Lyle F. Enyeart were, on motion of Counsel for Bockhaus, made parties to the action. We will herein refer to them by name or as plaintiffs in error. On the same date Bockhaus filed an answer and counterclaim in which the execution of the note and the deed of trust were admitted. By way of counterclaim against Lockwood Grader Corporation, Lockwood Graders of Colorado, T. J. Lockwood and Lyle F. Enyeart, Bockhaus alleged that he was the owner and operator of Bockhaus Manufacturing and Supply Company, engaged in the manufacture, sale and distribution of farm machinery in and around Monte Vista, Colorado, and had been so engaged for nine years, and that the Nebraska Corporation and the Colorado Corporation are similarly engaged in the manufacture, sale, and distribution of potato processing and handling machinery in said territory; that Enyeart was, and is, the manager of plaintiff's corporation in Monte Vista; that T. J. Lockwood was, and is, the majority stockholder, director and president of both corporations; and that Enyeart and Lockwood 'have at all times herein mentioned held like offices and interests in Lockwood Graders of Colorado.'

Bockhaus then alleged that plaintiffs, Lockwood Graders of Colorado, T. J. Lockwood and Lyle F. Enyeart 'individually and as officers of said corporation' have fraudulently, unlawfully and maliciously conspired together to force him out of business, and that pursuant to such conspiracy they falsely and maliciously represented and stated to people in the Monte Vista area that Bockhaus 'was going, or had gone, out of business for financial reasons'; that said conspirators discriminated against Bockhaus in the sale of parts of machinery and had made public certain confidential negotiations between plaintiff and defendant; that thereby defendant's business, credit and reputation was damaged in the sum of $5,000 and that 'the injuries complained of by defendant have been attended by circumstances showing a wanton or reckless disregard of defendant's rights and feelings, and that defendant is entitled to exemplary damages in the amount of $5,000.'

Lockwood Grader Corporation, Lockwood Graders of Colorado and T. J. Lockwood filed their answer to the counterclaim and denied all allegations of conspiracy and the elements of damage set forth therein. Enyeart, in his separate answer to the counterclaim, alleged that all his dealings with defendant were 'solely as an employee of said corporation and under the express * * * orders of the defendant, T. J. Lockwood;' that he severed his connection with said corporation on June 7, 1952, and that he 'did not conspire with, consult or advise with said T. J. Lockwood in or about any matter and thing relating to defendant Bockhaus.'

Trial of the issues on the counterclaim was to a jury, and after the introduction of defendant's evidence on his counterclaim it was dismissed as to Enyeart, with the consent of counsel for Bockhaus, because the evidence 'was insufficient to establish any conspiracy or connection of said Lyle F. Enyeart with the alleged wrongful acts complained of by defendant Bockhaus.' The issue on plaintiff's complaint for foreclosure of the trust deed was withdrawn from consideration of the jury and determined by the court.

The jury, by its verdict, assessed damages in favor of Bockhaus on his counterclaim against Lockwood Grader Corporation, Lockwood Graders of Colorado, and T. J. Lockwood, as follows: Compensatory damages $500, exemplary damages $3,000. Motion for new trial was overruled and judgment was entered on the verdict. Judgment was entered in favor of plaintiff and against Bockhaus on his note in the sum of $11,198.73, and a degree foreclosing the deed of trust securing the note was duly entered by the court. The Bockhaus property was ordered sold to satisfy the judgment, and after sale thereof by the sheriff, pursuant to the decree, a deficiency judgment was rendered against Bockhaus.

From the judgment against them on the counterclaim, plaintiffs in error bring the cause to this Court by writ of error.

Lockwood, Enyeart and Bockhaus were the only witnesses who testified in the action.

We quote the following from the testimony of Bockhaus:

'Q. Now you are not suggesting or claiming are you that the commencement of this foreclosure suit was illegal or fraudulent or malicious are you? A. No, I would not say there was anything fraudulent about it.

'Q. You owed the money? A. That is right.

'Q. And that foreclosure proceeding was general common knowledge in the community was it not? A. Well, that I could not say.

'Q. At least it was not a secret? A. No.

'Q. How did this account occur? A. Through equipment and parts bought.

'Q. In other words you bought and never paid for it after you sold it is that correct? A. I assume it is, yes.

'Q. In fact you were operating on his (Lockwood's) money is that not true. A. Yes, I believe it is.'

The gravamen of Bockhaus' counterclaim was that Enyeart in February, 1952 informed a meeting of potato shippers that Bockhaus was about to go out of business and go to work for Lockwood, and that Lockwood was about to take over the business of Bockhaus. Negotiations to this effect had been going on between Bockhaus and Lockwood. It is undisputed that Bockhaus wanted to go to work for Lockwood, but these negotiations were unsuccessful. Enyeart at the potato shippers' meeting read Exhibit 'A' which is a letter written on stationery of Lockwood Graders, dated at Monte Vista, Colorado, February 16, 1952, addressed to 'Bockhous Mfg. Co.,' The following is an exact copy of Exhibit 'A':

'After due consideration and looking into all of the details to the case following is how it is summed up.

'This account was accumulated from the Lockwood Grader Co. of Gering settlement was made to years ago, and the balance was placed on Mortgage, and that amount was taken out of the Corp. and placed in personal account. We do not feel that under any conditions will this new Corp. of Colo. take over the repayment of that account on a long term bases or on commissions.

'As I stated when talking with you 30 days ago the account would have to be settled before could consider working here. The request for 2% of Gross sales of this plant here is completely unreasonable, and can not be considered with fairness to our other workmen or the customers.

'In making a check to day find that you have so many debitors, that there would be garnishes on your wages and we would have no end of trouble. At this time I do not know what is the best plan for all concerned, the customers you and us.

'Sincerely yours, T. J. Lockwood.'

Lockwood testified that he did not instruct Enyeart to read this letter at the meeting, but left the matter to Enyeart's discretion.

When Enyeart was called as a witness by Bockhaus, he testified regarding his reading Exhibit 'A' at the meeting of the potato shippers, as follows:

'Q. Did he (Lockwood) tell you what the purpose was? A. Yes.

'Q. What? A. That he believed that all concerned, in other words he didn't believe there should be any scret about one thing and that in all fairness to everybody concerned, himself, the shippers and Mr. Bockhaus they should know what was going on; that is the statement he made to me.'

The only alleged conspirators were Lockwood, Enyeart and two corporations. One of these corporations was not in existence until June, 1952, some three months after the counterclaim was filed. During the trial Bockhaus admitted that Enyeart was not a conspiractor, and the court dismissed him as a defendant under the Bockhaus counterclaim. There is neither allegation nor proof that any officer or...